Picture supply: Unilever plc
Unilever (LSE: ULVR) shares have been on a little bit of a roll, up almost 10% up to now in 2026. It appears longer-term security is perhaps again in vogue as higher-risk tech shares have been unstable. However the share value dipped 3% Thursday morning (12 February), on the again of 2025 full-year outcomes.
Unilver reported 3.5% underlying gross sales progress, with 1.5% being all the way down to precise quantity progress. Of that, the corporate’s ‘Energy Manufacturers’ led the way in which with progress of 4.3% — and volumes up 2.2%. However income dipped a bit, resulting from foreign money actions and disposals.
We noticed a modest 0.7% rise in underlying earnings per share (EPS) with margins improved for the reason that ice cream enterprise was cut up out to kind The Magnum Ice Cream Firm. Magnum reported a 20% fall in working revenue the identical day — although it did face important separation and restructuring prices.
What does this imply for shareholders?
Money rewards
An underlying gross margin of 20% contributed to €5.9bn in free money circulation. Consequently, the quarterly dividend is up 3%. And the board has launched a brand new €1.5 billion share buyback programme.
Unilever has been refocusing on core merchandise and simplifying its enterprise over the previous few years. And it appears prefer it’s paying off. CEO Fernando Fernandez highlighted the goal of “prioritising premium segments and digital commerce, and anchoring our progress within the US and India.” And he added: “Regardless of slowing markets, our sharper focus and disciplined execution underpin our confidence for 2026 and past.”
So what ought to we anticipate for 2026? Administration steering signifies underlying gross sales progress between 4% and 6% for the yr, based mostly on at the very least 2% underlying quantity progress. And we must always anticipate a “modest enchancment” within the yr’s working margin.
All in all, I price this as a strong efficiency in a time of pressured market situations.
Worth proposition?
Unilever shares have placed on a formidable 27% over the previous few years. And that does seem to have put a defensive premium on the inventory now. EPS of 268p provides us a trailing price-to-earnings (P/E) ratio of 20 for the yr simply ended — considerably forward of the FTSE 100 long-term common. And that’s for a inventory with fairly common dividend yields a bit above 3%.
Forecast earnings progress in this sort of enterprise is modest at greatest, even whether it is optimistic within the present situations. However it doesn’t look prone to carry the P/E down very far within the subsequent few years.
My important worry proper now could be that Unilever shares maybe look absolutely valued — or possibly even a bit toppy. And we might be in for a interval of stagnation, particularly if the current ‘flight to security’ amongst traders ought to ease off when as we speak’s financial turmoil calms down. I think that’s why the income dip brought about the outcomes morning wobble.
This doesn’t imply I don’t price Unilever as an funding. I nonetheless do, and I reckon new ISA traders ought to think about it as a comparatively protected cornerstone for a long-term portfolio.
